QuestionYesterday my wife was involved in a small car accident in a parking lot. She was waiting for a place so she backed up a little bit to allow the other car to move, but she didn't see a 2006 Lexus that was just behind her, so she hit the Lexus. The damage was small (at first sight). After some time she and the other guy agreed not to report the accident to the insurance company (as it was a small damage) and pay for the repair costs out of our pocket. The outcome is that the rough estimate to repair the LEXUS is approx $1000 usd, then I am wondering if it could be better to report the accident to my insurance company. The deductible is $500 usd, but I am not sure if with this small claim the cost for the policy would increase for the next 3 years? At the end I may be better paying 1000 usd now than 500 usd + XXX usd in increased policy cost.
Do you have any advice for me on what could be the best way to proceed.
Thanks in advance
Answer
Dear J Mendez,
In the first place, your deductible does not come into play when your insurance is paying to repair the other car. Thus, you will not be paying out the $500. That only applies to your claims to repair your own car.
BUT, you are right about your rates going up. First, I would try to find out the missing piece of information that you need in order to make a decision: that is, how MUCH will your premium rate increase?
I would discuss this with your agent, as she will not report it to claims if you ask her not to. Get a feel for the amount of the raise in premiums and also the threshold payment on an at-fault accident that will count against you.
What do I mean? Well, in most states, it is the state insurance commissioner http://www.settlementcentral.com/links.php who sets the definition of what an "at-fault" accident will be. Thus, in my state, the commissioner has determined that any payment of less than $750 CANNOT BE COUNTED by your insurance company as an "at-fault" accident.
Thus, since $750 is the threshold, in your case, I would approach the Lexus owner and ask him to take only $700 from my company and I will give cash of $300, PLUS a $50 bonus as incentive.
That way, my company cannot count this as an "at-fault" accident, and my premiums will not go up. Sure, it cost me $350, but that would be a good investment for me.
Now it is your turn to find out the threshold amount of the "at-fault" designation and work with the victim to see if he will cooperate as I have suggested above.
Another thing is to be aware of the length of time during which your premiums can be increased. It is usually three years, as you have suggested.
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One final thing for the future or for those who are reading this online (no, this DOES NOT APPLY TO YOUR WIFE'S SITUATION inasmuch as there was insufficient impact to cause an injury) is to consider getting a general release in exchange for giving them the check for the damages.
Thus, in a case where there is enough impact to have caused some soft tissue injury, one would not wish to settle on the property damage, only to hear from the victim four months later that she has been treating for a soft tissue injury that she now intends to present to you as a bodily injury tort claim. Surprise!
Thus, in those cases, we want our readers to always present a general release for signature when paying for property damage. Anyone who needs to can write to me at my website below and I will give an example of a general release. Just make sure to mention that we met at allexperts.com so I will know it is not spam.
Basically, the general release includes all injuries, known and unknown.
Best wishes,
Dr. Settlement, J.D. (Juris Doctor)
